SpaceX seeks $40 billion for AI chips
- SpaceX (NASDAQ:SPCX) is reportedly seeking $40 billion in new debt to finance Nvidia chips for its data center operations.
- SpaceX shares fell about 2% in early Wednesday trading following the report.
- The financing would support the company’s AI compute expansion, which management says is contributing to its recurring revenue growth.
SpaceX (NASDAQ:SPCX) is reportedly seeking $40 billion in new debt to buy Nvidia (NASDAQ:NVDA) chips for its data centers, while its shares fell about 2% in early Wednesday trading.
Bloomberg reported that the proposed financing would include $10 billion in bank loans and $30 billion in investment-grade debt, with Apollo Global leading the financing and PIMCO reportedly considering participation.
“We’re on track, or we believe we’re on track, to hit $100 billion ARR,” said SpaceX Chief Financial Officer Bret Johnsen.
Johnsen also said a recently signed hosting agreement is expected to generate about $1.11 billion per month from December 1, equivalent to roughly $13 billion in annual recurring revenue.
SpaceX said its AI compute operations are becoming a larger part of its business alongside Starlink and launch services, while analysts remain focused on the company's rising debt exposure.
Following the announcement, SpaceX's share price was down 2%.
Yorkville Ives analyst Dan Ives said SpaceX’s contracted AI backlog and Starlink cash generation could support the additional leverage, while maintaining an Outperform rating and a $225 price target.
Morgan Stanley analyst Adam Jonas recently described SpaceX shares as inexpensive and pointed to the expected Starship 15 launch in late October or November as a potential near-term catalyst.
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Frequently asked questions
Why is SpaceX (NASDAQ:SPCX) seeking $40 billion in debt?
SpaceX (NASDAQ:SPCX) is reportedly seeking $40 billion in new debt to finance Nvidia chips for its expanding AI data center operations.
What are the financing terms for SpaceX (NASDAQ:SPCX)?
SpaceX (NASDAQ:SPCX) is reportedly considering $10 billion in bank loans and $30 billion in investment-grade debt, with Apollo Global leading the financing and PIMCO evaluating participation.
